Sky TV’s outsourcing plans hit hitch

Sky TV’s hopes of outsourcing the filming of sports events to United States-owned firm NEP have suffered a major setback after the Commerce Commission spelt out its competition concerns.

Sky announced in August that it planned to sell its outside broadcasting subsidiary OSB to NEP New Zealand which would then film events for Sky for the next 10 years.

But the Commerce Commission said in a ‘‘statement of issues’’ that the deal might mean NEP was the only company practically able to film at least some ‘‘lower profile’’ sports events.

That could have a knock-on effect on the ability for companies other than Sky to compete for broadcasting rights, it warned.

The commission singled out basketball, hockey and club football, events such as the rugby sevens in Hamilton, and Warriors rugby league and Wellington Phoenix football matches, as being most likely to be impacted.

The proposed sale of OSB would see Sky transfer 38 OSB staff and ownership of its six outside broadcasting trucks to NEP New Zealand

Sky chief executive Martin Stewart has said the deal would avoid Sky having to fork out $50 million to upgrade its outside broadcasting trucks so they could film events in 4K.

But the commission said the sale and the proposed 10-year outsourcing deal were ‘‘very closely connected’’ and it needed to look at both when considering whether to clear the sale.

NEP would need to film events for Sky at pre-agreed prices during the 10-year duration of the proposed supply agreement.

‘‘At this point we cannot rule out the prospect that the supply agreement could advantage Sky in the acquisition of broadcast rights and the broadcast of New Zealand premium live sports,’’ the commission said.

‘‘The exclusivity provisions in the supply agreement could result in NEP having limited capacity or incentive to perform work for third parties.

‘‘NEP is likely to be incentivised to maximise Sky’s share in the national markets for the acquisition of sports broadcasting rights and the broadcast of New Zealand premium live sports content.’’

Sky has kept the advice it has provided to the commission on what would happen if the watchdog declined to clear the sale confidential.

But it will still have an opportunity to turn the commission around.

The commission has invited further submissions and pushed back the expected date for its final decision until February.

Sky spokeswoman Chris Major said it was disappointed to be informed of the delay.